Section 6 – Businesses
An employer who operates an establishment covered by the measures relating to employee tips must file an annual report of tips for each employee, no later than the last day of February of the following year. Employers are entitled to a refundable tax credit equal to 75% of employer contributions to the extent they cover the tips received directly by an employee as well as those attributed by the employer under an attribution mechanism. Indemnities paid on general statutory holidays or for family or parental leave under the Act Respecting Labour Standards are eligible for the credit.
For federal and Quebec purposes6, individuals who carry out SR&ED work are entitled to a tax credit. In Quebec, the first $50,0007 in annual expenses does not give entitlement to the credit. To learn more about the 2018 rates, see Table C5 in the Corporate Taxation and U.S. Federal Tax Schedule.
6 In Ontario and New Brunswick, the credits are only offered to corporations.
7 Excluded expenses threshold applicable to a taxpayer whose total assets amount to less than $50M (amount increased gradually up to $225,000 when the assets reach $75M).
Apprenticeship Job Creation Credit – Federal
Employers may claim a non-refundable tax credit equal to 10% of salaries and wages paid in respect of apprentices who carry on a trade included in the Red Seal trades.8 The maximum annual credit is $2,000 per apprentice. Unused credits can be carried back three years and forward twenty years.
Credit for On-the-Job Training – Quebec
A taxpayer who engages a trainee or apprentice for eligible training is entitled to a refundable tax credit. Eligible expenses for this credit include the trainees’ or apprentices’ salaries as well as those of their supervisors. The eligibility conditions vary depending on the training provided.
The tax credit (for unincorporated taxpayers) is 12% of the eligible expenses and the weekly maximum for such expenses is $700 or $8759 depending on the type of training. The maximum number of hours of training supervision varies from 10 to 20 hours per week.
The tax credit is increased to 16% and the maximums to $875 and $1,22510 in respect of expenditures incurred to hire certain immigrant, handicapped or Aboriginal trainees or for internships in an eligible resource region. In addition, the number of supervisory hours is doubled.
When the following conditions are met, the 12% and 16% credit rates are increased to 20% and 25%, respectively:
- The trainee is a student trainee;
- It is at least the third consecutive taxation year for which the taxpayer is entitled to a tax credit for a student trainee;
- The eligible expenditure in respect of a student trainee is at least $2,500 for each of these three years.
Apprenticeship Training Credit – Ontario
Individuals who carry on a business are entitled to a refundable tax credit varying between 25% and 30% on expenses incurred with respect to eligible trainees working in a specialized trade. The maximum 30% tax credit rate is attained when the business’s payroll for the previous year does not exceed $400,000. The employer is entitled to a maximum tax credit of $5,000 per trainee annually up to a maximum of $15,000 for the first 36 months of the apprenticeship training program. This tax credit has been abolished and is no longer offered for apprenticeship training that began after November 14, 2017.
Cooperative Education Tax Credit – Ontario
An employer who hires a student registered in a cooperative education program is entitled to a refundable tax credit of 25% to 30% of expenses, up to a maximum credit of $3,000 per apprenticeship (maximum of four apprenticeships for the same student). Expenditures include salaries, wages and payments by the business to a university or college, or a placement agency.
If you hire trainees, consult a tax specialist to ensure you claim all the credits to which you are entitled.
8 Source: http://www.red-seal.ca/w.2lc.4m.2-eng.html
9 For training started since March 28, 2018. The maximums were $600 and $750 before that date.
10 For training started since March 28, 2018. The maximus were $750 and $1,050 before that date.
An individual who is a resident of Quebec on December 31 of a year may claim a refundable tax credit for taxi drivers or owners, if, as the case may be:
- The individual is the holder of a taxi driver’s permit at any time during the year;
- The individual, or a partnership of which he/she is a member, is the owner of at least one taxi owner’s permit on December 31 of the year and, during the period in question, the individual or partnership assumed 90% or more of the fuel costs for the taxi covered by this permit.
In 2018, this credit is the lesser of $574 and 2% of the gross income from employment or a business from the use of the taxi permit.
This document has been updated on August 31st, 2018 and reflects the state of the Law, including draft amendments, at that date.